Leading indicators show manufacturing slump in July
Ottawa, ON -- Driven by continued strength in domestic demand, the leading indicator posted a 0.3% gain in July 200...
Ottawa, ON — Driven by continued strength in domestic demand, the leading indicator posted a 0.3% gain in July 2005, the same as in June and little changed since the start of the year, reports Statistics Canada. Seven of the 10 components in the indicator rose, one more than in June as the U.S. leading indicator turned up. All three of the components that fell came from the manufacturing sector.
Household demand remained the main source of growth at the beginning of summer. The housing index continued to rise in July, on the heels of its largest increase in a year in June. Western Canada continued to dominate this growth, especially British Columbia, where housing starts in July hit their highest level of the year while the market for existing homes remained hot.
Durable goods sales remained brisk, especially in the West where it was Alberta’s turn to dominate growth. Retail sales in Alberta continued to rise at a 20% annual rate since December, driven by automobile sales.
Manufacturing generally slumped, despite the boom in investment in mining and energy in western Canada. Strengthening demand for machinery and metal products was counterbalanced by weakness for exports of autos and forestry products.
Inventories continued to rise, which led to a sixth straight decline in the ratio of shipments to stocks. New orders fell slightly for the second consecutive month (-0.4%). The average workweek turned down after three months of no change.
The Toronto stock market rallied thanks to double-digit gains in metal and energy issues for a second straight month. Stock prices have risen 10% overall since April.
The U.S. leading indicator grew by 0.2%, reversing a one-month drop in May. The U.S. leading indicator was revised up substantially over the last year. Without it, the Canadian index would have grown 0.5% in July.